Service tax on rent

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Querist : Anonymous

Querist : Anonymous (Querist)

16 March 2013 A shareholder cum director earned rent on land hiring from its company. who should bear service tax?

Rajeev Kumar Garg

Rajeev Kumar Garg (Expert)

16 March 2013 IF OWNER OF LAND AND PROPERTY IS COMPANY AND RENT AGREEMENT HAS BEEN MADE BETWEEN COMPANY AND TENANT, COMPANY WILL LIABLE TO PAY SERVICE TAX ON TOTAL RENT RECEIVED AFTER CROSS THE LIMIT OF 10 LACS.

OTHERWISE, DIRECTOR WILL PAY.
THANKS.
PLEASE CLICK ON "THANKS", IF YOU ARE SATISFIED WITH MY REPLY.
RAJEEV KR. GARG.
CONSULTANT.

Querist : Anonymous

Querist : Anonymous (Querist)

16 March 2013 OWNER OF THE LAND & PROPERTY IS SHAREHOLDER. COMPANY IS THE TENANT & RENT AGREEMENT IS MADE IN DUE COURSE. COMPANY HAS PAID RENT TO SHAREHOLDER.

Aashok Kumar Sharma

Aashok Kumar Sharma

(Expert)

24 July 2025 Thanks for sharing the scenario!

Here’s the clarification on **service tax liability on rent received by a shareholder/director from his own company**:

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### Facts Recap:

* The **shareholder/director owns the land/property**.
* The **company is the tenant** and pays rent to the shareholder/director.
* Question: Who bears service tax on rent received?

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### Service Tax on Rent under Indian Law (Pre-GST):

1. **Service Tax on Rent is applicable under the category “Renting of Immovable Property Service.”**

2. The **service provider is the person receiving the rent** (in this case, the shareholder/director, as owner and landlord).

3. The **service recipient is the tenant** (the company).

4. **Threshold limit:** Service tax is payable if the aggregate value of rent exceeds Rs. 10 lakhs per annum.

5. **If the rent paid by the company exceeds Rs. 10 lakhs per year, the landlord (shareholder/director) must register for service tax and pay service tax on rent received.**

6. The company (tenant) is generally **not liable to pay service tax on rent paid** — the liability rests with the owner/landlord.

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### So, in your case:

* Since the **shareholder/director is the owner and receiving rent**, they are liable to pay service tax if rent exceeds Rs. 10 lakhs per annum.

* The company (tenant) pays rent but does **not bear the service tax**.

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### Important notes:

* If the shareholder/director is not registered for service tax and the rent is less than Rs. 10 lakhs per annum, no service tax applies.

* The landlord should charge service tax on rent (presently 15% approx under GST replacement, but under old service tax regime it was 12.36%).

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If you want, I can help with calculation examples or registration process details.

Would that help?

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